1. Options, Futures and Other Derivatives Ch1: Introduction Part 1

Text Used in Course:
Options, Futures, and Other Derivatives
Ninth edition
Hull, John
Publisher: Pearson

[michaelyoung]

This is a gem, I literally just spent 1h on this 16min course, pausing and rewinding at any points that I had to digest.

[carlesmanguiano]

Now that the CFA exam has been posponed is a good moment to dig into this. Thanks for the course!

[nadekang]

Hi Mark, I would like to thank you for your free series in options, futures, and other derivatives. I learned quite a lot from you, and these also helped me to get a full-time contract at a bank. Much obliged!

[ktqwq]

2:47 The explanation here perfectly solves my confusion. Thanks!!!

[terrences]

Hello Mark, is the course still relevant in 2023-2024. Thank you for your time.

[thoughtheglass]

thanks for this :) I am leaving academia after a maths PhD and looking for quant work - so this is really helpful

[nithyasundaramoorthi]

Hey Mark, This is a wonderful series. Do you have any plans for uploading videos for the chapters post Chapter 11 in the book? Looking forward to it!

[mattc]

Watching this guy makes me want to sign up and register for the CFA

[anangelsdiaries]

I got the book two days ago and started reading it. I will use the videos as a primer. Thank you very much.

[MrBlackjack]

Title: "1. Options, Futures and Other Derivatives Ch1: Introduction Part 1"

1. Type of Video: Educational
2. Main Idea:
The video introduces the concept of derivatives in finance, which are financial instruments that derive their value from a more basic underlying variable. This variable can be an asset like property or stocks, or an event such as snowfall in a region. The video also explains the difference between exchange-traded and over-the-counter (OTC) derivatives.
3. Detailed Summary:
The speaker begins by introducing the textbook "Options, Futures and Other Derivatives" by John C. Hull, which is a standard in finance courses at both undergraduate and MBA levels. He acknowledges that the book can be challenging but assures the viewers that mastering its content will give them an edge in the field.

The speaker then defines derivatives as financial instruments whose value is derived from a more basic underlying variable. This variable can be a real asset like property, a financial asset like stocks, an index (stock index, housing price index, inflation rate index), or even an event like snowfall in a ski resort. The underlying variable doesn't necessarily have to be an asset, which is why the term 'variable' is used.

The video also explains the difference between exchange-traded and over-the-counter (OTC) derivatives. Exchange-traded derivatives are standardized contracts where a buyer and a seller come together to form a contract through a clearing house. This eliminates counterparty risk as the clearing house is the counterparty to all contracts. There has never been a default on an exchange-traded derivative, and they are highly regulated.

OTC derivatives, on the other hand, can be standardized but allow for a lot of customization that can't be found on exchanges. The transaction is between a buyer and a seller (bilateral clearing), which means if the seller is unable to pay, the buyer hasn't really won anything. To eliminate counterparty risk, the buyer and seller can opt to clear through a central counterparty. The OTC market is less regulated than the exchange-traded market, but regulation is increasing.

The speaker concludes by introducing some terminology that will be looked at in more detail later, such as forwards or forward agreements, which is an agreement to buy or sell a specific asset at a specific price at a certain future date.

4. Notable Quotes:
"If you can get through this [the textbook], it elevates you above all others who can't in this field."
"Derivatives are at the very heart financial instruments uh whose Val value depends on or I put in Brackets here is derived from and you'll notice derived is the root of derivatives."
5. Key Takeaways:
- Derivatives are financial instruments that derive their value from a more basic underlying variable, which can be an asset or an event.
- Exchange-traded derivatives are standardized, eliminate counterparty risk, and are highly regulated.
- OTC derivatives allow for customization, have counterparty risk, and are less regulated but regulation is increasing.
- Forwards or forward agreements are an agreement to buy or sell a specific asset at a specific price at a certain future date.

[高金山-fl]

7 yrs ago, I spent hours on John Hull's book at the library of my alma mater, now I'm here learning again.

[kaarinaMoongo]

You made this topic so interesting and less scary for me. Thank you

[NPatel-vksk]

Hi Mark, I hope you continue making these videos, They are a GREAT help, on top of reading the book along the side. You really make some arguments and confusions clear.

[Daj]

Hi Mark, at 15:34 min ish you say that it is an Asymmetrical Payoff, I think what you meant to say is that it is symmetrical, since the two parties move proportionally to each other ("adding both and getting a straight line"). From my understanding, this is true for Forwards/Futures but not the case for options, due to the premiums involved in such transactions. Either way, with options or Forwards/Futures, it is always a zero-sum gain. I think that is what you were trying to say, correct?

[jonie]

Hello Mark. Huge thanks for all these videos. I've been following your videos and they are really helpful for self study preparation for the cfa exams. thanks.

[dzoletasevski]

Huge thanks for this Mark, you are the best!

[monlivreetmoi]

May Allah reward you for your effort. I am very happy to listing their videos

[daniigoldxd]

Hey, I'm really throwing it out there, don't even know if you will see this, but you stopped your wonderful series at chapter 11, and I only found your videos when I was already in the prime of the Black Scholes Model and Futures, do you have any you can upload on the Greek Letters(chapter 19), Credit Risk(chp24) and Credit Derivatives(chapter 25)? As well maybe any reference to delta neutral, and how to find the percentage of the original portfolio be sold at when your not given the stock price but are given the value of portfolio.Thanks!

[GrantFerdinandsen]

Thank you for making this and posting it. Does anyone know if there is an audio book of the ninth edition?

[omkarkatwate]

hey mark thank you so much for sharing your knowledge. i am starting this serious @24-08-2021 at the end video i am going to mention date.
thank you so much again